20 th Meeting of the Programme Coordinating Board Geneva, Switzerland June 2007

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1 15 May th Meeting of the Programme Coordinating Board Geneva, Switzerland June 2007 Provisional agenda item 2: Unified Budget and Workplan and Financial Report: Interim financial management information for the biennium and financial update as at 30 April 2007

2 Page 2/10 Additional documents for this item: i Unified Budget and Workplan (UNAIDS/PCB(20)/07.3) ii. Proposal to PCB for new discretionary authority for the Executive Director with respect to the programming and disbursement of funds received over the approved level of the budget (UNAIDS/PCB(20)/07.15) iii. Mid-term Progress Report: Unified Budget and Workplan (conference room paper) Action required at this meeting the Programme Coordinating Board is requested to: i. take note of the interim financial management information for the biennium and the financial update as at 30 April ii. encourage donor governments and others to release their contributions towards the Unified Budget and Workplan for as soon as possible, if they have not already done so. Cost implications for decisions: none

3 Page 3/10 INTRODUCTION 1. The financial period of UNAIDS covers two consecutive calendar years, beginning with an evennumbered year. This document presents interim financial management information on the biennium, as at 30 April A formal and certified financial report covering the full biennium will be prepared at the end of 2007, the second year of the financial period. 2. This interim financial management information is not accompanied by an audit opinion. However, the accounts of UNAIDS are subject to continuous examination and review by both internal and external auditors of WHO, which provides the administration in support of the Programme as per resolution 1994/24 of the Economic and Social Council of the United Nations and Article XI of the Memorandum of Understanding among Cosponsors establishing UNAIDS. THE UNIFIED BUDGET AND WORKPLAN FOR THE BIENNIUM Approved Budget and Workplan 3. The Unified Budget and Workplan is geared to the following strategic considerations: supporting achievement of the UN Declaration of Commitment on HIV/AIDS and the Millennium Development Goals; securing additional resources for the response to AIDS from international and domestic sources; providing timely and effective support to countries to scale up their national response; eliminating bottlenecks to effective action ("making the money work") through better coordination among donors, meeting demands for technical support and strengthening human resource capacity in countries; promoting country-level ownership, harmonization and accountability through implementation of the "Three Ones" principles to enhance strategic coordination and effectiveness; supporting major global initiatives including multilateral funding initiatives, and efforts to expand access to antiretroviral treatment and revitalize worldwide prevention efforts; addressing gap areas in the response such as stigma and discrimination, human rights and neglected population groups including injecting drug users, sex workers, men who have sex with men, women and girls and uniformed services; and, ensuring strategic coherence of the work of the Cosponsors and Secretariat and the UN system as a whole. 4. The Unified Budget and Workplan includes a breakdown of the expected results and resource needs of each Cosponsor, the Secretariat and Interagency activities. The activities of each relate to one or more of the UNAIDS 16 principal results 1. The Unified Budget and Workplan also includes agreed principles and processes that further harmonize the work of Cosponsors and the Secretariat. 5. At its 17th meeting held in Geneva June 2005, the PCB endorsed the strategies and approaches contained in the Unified Budget and Workplan. It approved a core budget of US$ million and a proposed distribution of these resources as follows: US$ million to be shared among the 10 Cosponsors; US$ million for the Secretariat; and US$ 84.4 million for Interagency activities. The PCB also approved supplemental budgets for the Secretariat and Interagency activities in the amounts of US$ 25 million and US$ 21.2 million respectively, subject to availability of funds. Furthermore, the PCB at its 18 th meeting held in Geneva June 2006 approved the inclusion of a new supplemental budget line in the Interagency section in the amount of US$ 40 million specifically 1 The principal results are derived from, and represent the Joint Programme s contribution to meeting the goals articulated in the Declaration of Commitment on HIV/AIDS of the United Nations General Assembly s Special Session on HIV/AIDS in 2001.

4 Page 4/10 dedicated to the provision of technical support to countries, bringing the components of the Unified Budget and Workplan (core and supplemental) managed by the UNAIDS Executive Director up to US$ million 2. Funds made available to the Unified Budget and Workplan for During the period under review, income totaling US$ million was made available towards the Unified Budget and Workplan for Some 28 governments and the World Bank contributed respectively 93% and 3% of this amount. The remaining 4% is made up of interest received and apportioned during the reporting period, together with miscellaneous income, including small donations resulting from UNAIDS promotional campaigns launched with the assistance of the United Nations Federal Credit Union and honoraria received by UNAIDS Secretariat staff. Table 1 provides the details of the funds received towards the Unified Budget and Workplan during the period 1 January April Excludes US$ 33 million of special allocations approved by the PCB; comprised of US$ 21 million for priority strategic initiatives and investments and US$ 12 million carried forward from previous biennium.

5 Page 5/10 Table 1: Unified Budget and Workplan details of income as at 30 April 2007 Voluntary contributions Funds received toward the Unified Budget and Workplan Governments Andorra Australia Belgium (incl. Ministry of the Flemish Community) Brazil Canada China Denmark Finland France Germany Greece Ireland Japan Liechtenstein Luxembourg Monaco Netherlands New Zealand Norway Poland Portugal Russian Federation Spain Sweden Switzerland United Kingdom of Great Britain and Northen Ireland United States of America a/ Autonomous Government of the Region of Extramadura, Spain Républic et Canton de Génève, Switzerland Sub-total Cosponsoring Organizations World Bank Sub-total Other Greek Action for Africa United Nations federal credit Union United Nations Office in Geneva Miscellaneous Sub-total Other income Interest Sub-total TOTAL a/ Includes US$ 12.1 million balance of 2005 letter of credit drawn in 2006

6 Page 6/10 7. Table 2 compares the percentage of funds contributed towards the respective Unified Budget and Workplans for , and by 30 April in the fiscal years 2003, 2005 and The percentage of funds received against the Unified Budget and Workplan for currently stands at 62% (US$ million against US$ million), which compares well to the 64% and 68% collection rate experienced at the same time in 2003 and 2005, considering the significant increase in the level of the Unified Budget and Workplan. 8. This table also shows that despite the significant increase in the level of the funding requirements for as compared to and , that contributions for the period under review have remained at a high level, both in absolute and relative terms. Table 2: Percentage of income received against the Unified Budget and Workplan funding requirements by 30 April in 2003, 2005 and April April April 2007 Approved level of the Unified Budget and Workplan in the concerned biennium (in US$ `000) Income received against the Unified Budget and Workplan (in US$ `000) Percentage of income received against the Unified Budget and Workplan funding requirement 64% 68% 62% 9. Several factors have contributed to this trend, such as a general increase in contributions from the donor community to UNAIDS, as well as the continued weakening of the US dollar against other major donor currencies which has increased the US dollar value of several donor contributions. Funds expended under the Unified Budget and Workplan for During the period 1 January 2006 to 30 April 2007, expenditure (including transfers to Cosponsors) totaling US$ 292 million was incurred against the budget of US$ million approved for the Unified Budget and Workplan (core and supplemental) resulting in a financial implementation rate of 71.8%. This expenditure was made as follows: US$ million was transferred to Cosponsors for the implementation of their AIDS activities contained in the Unified Budget and Workplan; US$ 73.3 million was expended for the Interagency activities; and US$ 98 million was expended for Secretariat activities and staff. 1. Funds transferred to Cosponsors 11. As at 30 April 2007, financial transfers made to Cosponsors amounted to US$ million. These transfers represent 100% of Cosponsors share under the Unified Budget and Workplan for Information on the proportion of transfers made to individual Cosponsors versus total transfers together with amounts transferred against each of the agreed principal results is provided in Figure 1. 3 See footnote no. 2 page 3

7 Figure 1: Funds and proportions transferred to Cosponsors as at 30 April 2007 UNAIDS/PCB(20)/07.4 Page 7/10 WORLD BANK 10% UNHCR 3% UNICEF 16% WFP 3% WHO 21% UNDP 11% UNFPA 14% UNESCO 8% ILO 7% UNODC 7% Principal Results Funds transferred (in US dollar `000) 1 UN system coordination Human rights Leadership and advocacy Partnerships Country capacity "Three Ones" HIV prevention Women and adolescent girls Children affected by HIV and AIDS Programmes addressing vulnerability to HIV Health care systems for treatment of HIV and AIDS Family and community-based care National action to alleviate impact AIDS in conflict-and disaster-affected regions Strategic information, research and reporting Resource mobilization, tracking and needs estimation Human and technical resources Expenditure incurred against Interagency resources 12. The Interagency budget provides funding for joint or collective action by the UNAIDS family as a whole. The Interagency resources share of the Unified Budget and Workplan for consists of five main parts: the operational and related support of the Interagency country staff (UNAIDS Country

8 Page 8/10 Coordinators and experts in monitoring and evaluation, partnership development and resource mobilization) working with Theme Groups on HIV/AIDS at country level; direct financial support to catalytic projects that contribute to or strengthen an expanded response in priority countries through the Programme Acceleration Funds programmed by these Theme Groups; coordinated and collective UNAIDS action to support the stimulation of effective responses to HIV/AIDS through the implementation of appropriate interventions at country, regional and global level; the enhancement of UN System staff s capacity to respond to the AIDS epidemic at individual, professional and organizational levels and the technical support to countries. 13. As at 30 April 2007, total amount of US$ 73.3 million was expended for Interagency activities as follows: US$ 54 million towards the operations of Theme Groups, including salary costs for UNAIDS Country Coordinators and experts; US$ 9.7 million disbursed for Programme Acceleration Funds; US$ 5.0 million to support a number of targeted interventions at country, regional and global levels; US$ 1.9 million disbursed towards activities aiming at increasing staff capacity on HIV and AIDS; US$ 2.7 million disbursed towards technical support to countries. 14. A breakdown of Interagency resource expenditure is provided by principal results in Table 3 below: Table 3: Unified Budget and Workplan: Interagency resources budget allocation and expenditure as at 30 April 2007 (in US `000 dollars) Principal Results Interagency resources allocation expenditure 1 UN system coordination Leadership and advocacy Country capacity "Three Ones" HIV prevention Strategic information, research and reporting Human and technical resources Total a/ a/ Consists of US$ 84.4 million core budget and US$ 61.2 million supplemental 3. Expenditure incurred against the Secretariat budget 15. Secretariat expenditure amounted to US$ 98 million as at 30 April 2007; representing a financial implementation rate of approximately 70% of the US$ million (core and supplemental). This includes US$ 37.2 million spent on activities, and US$ 60.8 million on staff costs. Further details on the funds expended by the Secretariat are shown by principal results in Table 4 below.

9 Page 9/10 Table 4: Unified Budget and Workplan Secretariat budget allocation and expenditure as at 30 April 2007 (in US dollars `000) Principal Results Secretariat allocation expenditure 1 UN system coordination Human rights Leadership and advocacy Partnerships Country capacity "Three Ones" Women and adlescent girls Strategic information, research and reporting Financial resources Human and technical resources Total a/ a/ Consists of US$ million core budget and US$ 25 million supplemental Fund balance 16. Despite an overall financial implementation rate of nearly 100% during the ten-year period from 1996 to 2005, the Joint Programme has consistently ended each financial period with a positive and accumulated fund balance, commensurate with the biennial budget increases. On 31 December 2005, this accumulated fund balance amounted to US$ million. 17. Without a significant fund balance every biennium, the Joint Programme would not be able to operate without interruption. Immediate access to this fund balance at the beginning of 2006 provided the possibility for the Secretariat to transfer to Cosponsors up to 50% of their shares under the Unified Budget and Workplan during the month of January 2006, thus ensuring continuity and smooth implementation of their activities. It is worth noting in this context, that the financial rules of most Cosponsor organizations require the costs of filled posts be obligated for the full year at the beginning of each calendar year, and that such upfront payments therefore facilitate continuity. 18. In light of the level of funds already received for the Unified Budget and Workplan for , as well as assurances received from donor governments regarding the timely release of their outstanding pledges for the biennium , the UNAIDS Secretariat estimates at this time to be in a position to raise approximately US$ 400 million to fund the Unified Budget and Workplan. On the assumption that the UNAIDS Secretariat can fully implement the Unified Budget and Workplan by 31 December 2007, the Programme will be left with an estimated fund balance of US$ 126 million as at 31 December 2007, which is consistent with previous biennia fund balances. 19. The Executive Director recommends that advances again be made to Cosponsors against their shares under the Unified Budget and Workplan. Subject to the separate approval of the Unified Budget and Workplan by the PCB, it is therefore recommended to earmark US$ 67.3 million under the anticipated fund balance as at 31 December 2007, representing 50% of Cosponsors share under the proposed Unified Budget and Workplan, for transfer to Cosponsors in January The remaining amount under the anticipated fund balance will enable the Executive Director to continue Secretariat and Interagency activities during the transition period, and to obligate the

10 Page 10/10 costs of filled posts under both Secretariat and Interagency sections of the Unified Budget and Workplan in January 2008 in accordance with the financial rules which require the costs of filled posts be obligated for the full year at the beginning of each calendar year, pending receipt of contributions for